An Israeli man admitted this week to his part in a $35 million Ponzi scheme along with six co-conspirators, including an Orthodox Jew whom U.S. President Donald Trump pardoned during his last week in office.
Shlomo Erez, a 56-year-old attorney who claims to have served in a classified military unit attached to the Israeli Prime Minister’s Office, pled guilty on Tuesday to one count of conspiracy to commit securities fraud, one count of conspiracy to commit money laundering and one count of conspiracy to obstruct justice, according to the U.S. Attorney’s Office for the District of New Jersey.
U.S. Attorney Philip R. Sellinger said Erez assisted Eli Weinstein, a twice-convicted fraudster whose sentence was commuted by Trump in 2020, including by hiding his identity from investors, helping to steal millions of dollars, and aiding Weinstein in concealing assets from earlier victims.
“This scheme used phony identities and false promises of access to deals involving scarce medical supplies, baby formula, and first-aid kits supposedly destined for wartime Ukraine to defraud victims. Erez will now face justice for his crimes, and we will continue to prosecute the other alleged conspirators,” stated Sellinger.
Sentencing for Erez is scheduled for Nov. 5. The Israeli citizen is facing a maximum of five years in jail on the charges of conspiracy to commit securities fraud and conspiracy to obstruct justice, while the money laundering charges could land him in prison for up to 20 years.
Four of Erez’s co-conspirators—Christopher Anderson, Richard Curry, Alaa Hattab and Joel Wittels—have pled guilty to conspiracy to commit securities fraud and are awaiting sentencing. Meanwhile, charges are pending against suspects Weinstein and Aryeh Bromberg.
Eliyahu “Eli” Weinstein was previously convicted in a New Jersey federal court of defrauding investors through two real estate Ponzi schemes, which resulted in combined losses of approximately $230 million.
For these crimes, Weinstein was sentenced to serve 24 years in prison, followed by three years of supervised release. However, on Jan. 19, 2021, after having served less than eight years in jail, Trump commuted Weinstein’s term, though leaving intact the rest of his sentence.
Lakewood, New Jersey
At the time, the White House described the Lakewood, New Jersey, resident as a “father of seven children and a loving husband.”
Leading figures in the ultra-Orthodox world, as well as attorney and Harvard University emeritus law professor Alan Dershowitz, had supported calls for his release, saying he was a changed man.
Yet according to prosecutors, less than a year after his release, Weinstein launched a new scheme to defraud at least 150 investors, mostly family and friends within the tight-knit Orthodox community of Lakewood.
Using the fake name “Mike Konig,” Weinstein is said to have worked to solicit money from investors through a company called Optimus Investments Inc. in collaboration with Bromberg and Wittels.
Court documents show Weinstein, Bromberg and Wittels received most of the investor money through a second company, Tryon Management Group LLC, which was owned and controlled by Anderson and Curry.
Almost immediately after Tryon and Optimus started receiving the funds, Tryon failed to pay back its investors, and the conspirators agreed to secretly pool cash from existing investors and use it to make monthly payments to other investors in a “Ponzi-like fashion,” authorities allege.
At Weinstein’s orders, Erez conducted transactions for purposes other than those promised to investors, including the purchase of a penthouse in Miami and an apparent land deal in Morocco.
Erez also conspired with Weinstein and others to launder the proceeds of their crimes, opening bank accounts to hold funds that the Israeli lawyer knew were the proceeds of the fraud. Erez also created business entities to invest the funds in real estate for Weinstein’s benefit.
Weinstein and Bromberg were arrested by FBI agents in New Jersey in July of last year, while Erez was apprehended at New York’s John F. Kennedy International Airport upon his arrival to the United States.
“Financial crimes like the charges Shlomo Erez pled guilty to today cause great emotional harm to the numerous victims who trusted this defendant with their hard-earned money,” said Jenifer L. Piovesan, the special agent in charge at the Newark Field Office of the IRS.
“We will continue to aggressively investigate cases of people who victimize others for their own financial gain,” added Piovesan.
